CA Budget $16 Million in the Hole

Gov. Brown has $16 billion reasons to be embarassed -- and to change budget strategies. But he won't.

In an utterly frustrating video release this weekend, the governor of California revealed that the state budget hole out of which he's been trying to dig is nearly twice as big as he thought four months ago. The projected deficit, he says, is $16 billion, up from a January estimate of $9 billion.

But what's worse than the deficit was Brown's response: to continue on the same guaranteed-to-fail path he's been on since taking office nearly 17 months ago.

What's wrong with Brown's approach to the budget? The video, available above, shows four ways:

1. He's talking about the budget as a math problem.

Brown gives himself credit in the video, shown above, for bringing the deficit down from a supposed $26 billion when he came into office to $16 billion now -- as though this was progress on the way to balance. It isn't.

Brown has cut things and tried to raise taxes -- just like his predecessor as governor. But the deficit stays high, albeit bouncing around. That's because the deficit really isn't a math problem. And it doesn't work on common sense principles. You can't balance a $16 billion budget deficit in Calfornia by raising taxes by $16 billion or cutting the government by $16 billion. You'd still have a budget deficit.

Why? Because the deficit is a product of a broken system. That system is too complicated to produce predictable outcomes, so it can't be managed effectively. But in general, the system behaves like a ratchet, ratcheting up certain kinds of spending and ratcheting down revenues. A big reason why budget projections went up from $9 billion to $16 billion is because projections are impossible in this system. Another reason is that revenues didn't grown -- even though the economy is growing. The budget system doesn't have much to do with reality anymore.

But Brown, by talking about this as a math problem, is misleading voters--and raising expectations for himself and for his budget plans that neither he nor his budget will ever be able to meet.

2. His rhetoric is too personal.

Brown has been talking about solving the budget as some sort of test of experience and political know-how and fiscal toughness. If only it were--the governor, who has plenty of all three, would have solved it by now. But the budget problem is a different kind of problem -- a problem that can't be solved by guile or brute force.

But Brown's rhetoric -- and the rhetoric of his critics -- makes it harder to solve the problem, because the narratives that Brown and his critics rely upon are false. They talk about the budget as if it could be solved if politicians were just tougher or more experience or more honest. That's simply not the case. The fact is that no one can solve the current budget deficit -- because it's the product of a very complicated broken budget system that is beyond the ability of any politician to manage or balance.

3. He's overselling his temporary tax initiative as a balm for the budget, when it may well make things worse.

In this video, Brown says things that he can't know for sure are true. He says his initiative will help the schools--but, given the complexity of the underlying budget system, it's possible that the schools will be worse off funding-wise than they were previously even if his tax measure passes.

And it's weird for the governor to tout the constitutional guarantee in the initiative for local governments. Because that's the part of the initiative that has the potential to make the budget worse in the long term -- adding to the ratchet effect. Remember, this initiative includes only temporary tax increases -- which means in the long term this initiative doesn't add to the revenue base of the state. But the constitutional guarantee is permanent. Long run, that's a net loss for the budget.

4. He's not talking about the broken system.

Fixing the budget requires fixing the budget system, which means unplugging all of the tax and fiscal rules that ratchet up spending and ratchet down revenues. And to do these big budget fixes, a governor likely would have to embrace other kinds of political reform to make Sacramento politicians more accountable.

Brown doesn't talk about any of this. Instead, he talks about the budget as a "hole" that needs to be filled.

Please, Jerry, stop trying to throw dirt in that hole. We Californians are stuck in the bottom of it, with the mud already up to our necks.

Lead Prop Zero blogger Joe Mathews is California editor at Zocalo Public Square, a fellow at Arizona State University’s Center for Social Cohesion, and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (University of California, 2010).